U.S. & Ezone Rates of Service-Sector Contraction Slowed in Tandem
May 6, 2009
| U.S. | Ezone | U.S. | Ezone | Sum of | |||
| Services | Services | Spread | Mf’g | Mf’g | Spread | Spreads | |
| Feb 2008 | 49.7 | 52.3 | -2.6 | 48.8 | 52.3 | -3.5 | -6.1 |
| March | 49.9 | 51.6 | -1.7 | 49.0 | 52.0 | -3.0 | -4.7 |
| April | 51.9 | 52.0 | -0.1 | 48.6 | 50.7 | -2.1 | -2.2 |
| May | 51.2 | 50.6 | +0.6 | 49.3 | 50.6 | -1.3 | -0.7 |
| June | 48.8 | 49.1 | -0.3 | 49.5 | 49.2 | +0.3 | 0.0 |
| July | 49.6 | 48.3 | +1.3 | 49.5 | 47.4 | +2.1 | +3.4 |
| August | 50.4 | 48.5 | +1.9 | 49.3 | 47.6 | +2.1 | +4.0 |
| Sept | 50.0 | 48.4 | 1.6 | 43.4 | 45.0 | -1.6 | 0.0 |
| October | 44.6 | 45.8 | -1.2 | 38.7 | 41.1 | -2.4 | -3.6 |
| November | 37.4 | 42.5 | -5.1 | 36.6 | 35.6 | +1.0 | -4.1 |
| December | 40.1 | 42.1 | -2.0 | 32.9 | 33.9 | -1.0 | -3.0 |
| Jan 2009 | 42.9 | 42.2 | +0.7 | 35.6 | 34.4 | +1.2 | +1.9 |
| Feb | 41.6 | 39.2 | +2.4 | 35.8 | 33.5 | +2.3 | +4.7 |
| March | 40.8 | 40.9 | -0.1 | 36.3 | 33.9 | +2.4 | +2.3 |
| April | 43.7 | 43.8 | -0.1 | 40.1 | 36.8 | +3.3 | +3.2 |
Parallel PMI trends in the United States and Euroland last month point to very similar growth rates. Readings below 50 indicate declining activity, but lessening distances from “50” imply slower rates of contraction. Service-sector production represents almost three-fourths of GDP and is thus more significant than manufacturing PMI’s released a few days ago. For a second straight month, the service PMI’s reported by the United States and Euroland were almost identical, and the spread between the two sets of figures was less than a point in three of the first four months of 2009, something that didn’t happen at all during the second half of 2008. The right-most column above is the algebraic sum of the differentials between the service- and manufacturing PMI’s. The 3.2-point U.S. advantage reflects manufacturing entirely.
These PMI scores suggest that the intensity of the global recession peaked very late in 2008, but the April values remained far beneath 50, suggesting that the onset of recovery is not yet imminently at hand. PMI readings are not a definitive measure. Other data have aroused hope that recoveries might actually begin no later than 3Q09, and that has spurred a powerful rally in equities since early March. Shortcomings in the composition of the rally, however, raise questions about its ability to endure.
Copyright 2009 Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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